Polygon: Everything to Know
By Beluga Research July 17, 2023
- Polygon is a system that allows software developers to create and deploy their own blockchain networks
- IT provides a way to establish a blockchain to engage in financial transactions
- The Polygon platform is compatible with Ethereum
- Polygon offers faster and cheaper transactions as well as the security and decentralization of Ethereum
Polygon allows a developer to create one or more blockchain networks to enable them to engage in financial transactions. Polygon is a multichain system, meaning it is a platform built on top of the Ethereum platform where new blockchains can be deployed.
In more technical language, Polygon is a layer 2 scaling solution. Layer 2 aims to address Ethereum's scalability issues. Polygon was initially launched in 2017 with the name Matic Network, and was rebranded as Polygon in 2021. The developers who designed Polygon did so with the intention of providing faster and cheaper transactions with the security and decentralization of Ethereum.
Developers can use Polygon to create custom blockchain networks that are interoperable with other networks in the Polygon ecosystem. Since Polygon is also compatible with Ethereum, developers can easily port Ethereum-based applications to the Polygon network.
A Brief History
Jaynti Kanani, Sandeep Nailwal and Anurag Arjun founded Polygon in 2017. The project was originally called Matic Network. The idea of the platform was to provide faster and more efficient transactions on the Ethereum network. In 2019, the Matic Network conducted an initial exchange offering (IEO) on Binance. This raised $5 million in funding.
In 2020, the Matic Network rebranded to Polygon. It shifted its focus to becoming a multichain system that could support multiple blockchain networks. The rebranding was aimed at broadening the project's scope beyond being a scaling solution for Ethereum.
Since the rebranding, Polygon has gained a lot of attention from the crypto community. It has become much more popular. In May 2021, Polygon raised $9.6 million in a funding round led by billionaire investor Mark Cuban.
What is Polygon?
Polygon is a layer 2 scaling solution built on top of Ethereum. It achieves faster transaction speeds than Ethereum by using a modified version of the Plasma framework. The Plasma framework is a layer 2 scaling solution that allows for faster and more efficient transactions on the Ethereum network.
Plasma has some limitations, such as being unable to support smart contracts. Polygon's modified version of the Plasma framework overcomes these limitations. It allows for the creation of smart contracts on layer 2.
The blockchain networks that developers can create and deploy using Polygon are interoperable with other networks in the Polygon ecosystem. This means developers can easily create complex decentralized applications (Dapps) that span multiple networks.
Polygon has a proof-of-stake (PoS) consensus mechanism, which allows for faster transaction processing and lower fees compared to proof-of-work (PoW) systems. PoS is more energy-efficient than PoW. This makes Polygon a more environmentally-friendly option than similar alternatives.
- Create an Ethereum wallet. MetaMask is one example of an Ethereum wallet, although there are many other options for Ethereum wallets on the market today.
- Acquire ether (ETH). This ETH is needed to pay for a gas fee, the fee needed to make a change in the blockchain.
- Connect the wallet to the Polygon network . Add the Polygon Network Remote Procedure Call (RPC) to MetaMask.
- Transfer the ETH to the Polygon network . Use the Polygon Bridge. This is a two-way bridge that allows a user to move assets between Ethereum and Polygon. The Polygon Bridge supports a wide range of assets, including ETH, ERC-20 tokens and ERC-721 tokens. A user can also use the bridge to transfer assets back to Ethereum.
- Interact with Dapps on the network. Polygon has a growing ecosystem of Dapps, including decentralized exchange (DEX), gaming platforms and NFT marketplaces. Popular Dapps on Polygon include QuickSwap, Aave and OpenSea. QuickSwap is a decentralized exchange offering fast and cheap trading of ERC-20 tokens. Aave is a decentralized lending and borrowing platform that allows users to earn interest on assets. OpenSea is a marketplace for buying, selling and discovering NFTs.
- High throughput. This allows Polygon to process thousands of transactions per second. Polygon achieves this through a combination of PoS checkpoints, sidechains and plasma chains. PoS checkpoints are committed to the Ethereum mainchain, which provides security and interoperability with Ethereum. Sidechains are independent blockchain networks that can process transactions in parallel with the main chain. Plasma chains are a type of sidechain that can process transactions more efficiently by batching transactions together.
- Low gas fees. Gas fees on Polygon are significantly lower than on Ethereum. This makes Polygon more affordable for users to interact with Dapps. It also makes Polygon more affordable for developers who want to deploy smart contracts. Polygon achieves this through the use of PoS checkpoints, which allow for faster and cheaper transactions than proof-of-work (PoW) consensus mechanism used by Ethereum. In addition, Polygon has a fee burning mechanism that reduces the overall supply of its native token, MATIC. The mechanism can help to increase Polygon's value over time.
- Better user experience than Ethereum. Transactions on Polygon are fast and cheap. This makes the system accessible to users who may not be able to afford Ethereum's high gas fees. In addition, Polygon has a growing ecosystem of Dapps that offer a wide range of services, from decentralized finance (DeFi) to NFTs. This makes it easy for users to find and use Dapps that suit their needs.
- Low transaction fees. In contrast, Ethereum can have high gas fees during times of network congestion. Polygon transactions are significantly cheaper. This makes Polygon an attractive option for users who want to avoid high fees.
- Fast transaction speeds. Polygon uses a combination of technologies, including Plasma sidechains and rollups. These help the system process transactions quickly. The speed is especially important for applications that require fast confirmation times, like decentralized exchange (DEX) and gaming applications.
- Interoperability. Polygon is designed to be interoperable with other blockchains. It can communicate and exchange data with other networks. This makes it comparatively easy for developers to build applications that can work across multiple blockchains. More applications result in a higher number of users adopting and using Polygon.
- Ecosystem. Polygon has a growing ecosystem of dApps and projects built on top of its network. These include popular projects such as Aave, Curve and SushiSwap. The Polygon ecosystem is supported by a strong community of developers and users who are actively working to improve the network.
- Security. Polygon uses a proof-of-stake (PoS) consensus mechanism. This mechanism is considered more energy-efficient and secure than proof-of-work (PoW). Polygon is less vulnerable to 51% attacks, which can be a concern for smaller PoW networks.
- Centralization. Polygon is more centralized than other layer 2 scaling solutions. The network relies on a limited number of validators to secure the network. While this can lead to faster transaction speeds and lower fees, it also means the system is more vulnerable to attacks and censorship.
- Dependency on Ethereum . Since Polygon is built on top of the Ethereum blockchain, any issues with Ethereum can also affect Polygon. This can lead to network congestion and higher gas fees during times of high demand.
- Limited decentralization . While Polygon uses a PoS consensus mechanism, it still relies on a limited number of validators to secure the network. As a result, the network is less decentralized than other PoS networks. This can be a concern for some users.
- Competition . Polygon faces competition from other layer 2 scaling solutions, such as Optimism and Arbitrum. While Polygon has a strong ecosystem and community, it will need to continue to innovate and improve its tools to remain competitive in the long run.